Seaway System Special Section

Great Lakes St. Lawrence Seaway System.

Since 1959, the Great Lakes St. Lawrence Seaway System (Seaway System) has been a vital waterborne transportation link for moving goods between the heartland of North America and international markets. The Seaway System is a binational waterway operated jointly by the United States and Canada. The System encompasses the St. Lawrence River and the five Great Lakes, and extends 2,300 miles from the Gulf of the St. Lawrence at the Atlantic Ocean to the western end of Lake Superior at the twin ports of Duluth, Minnesota, and Superior, Wisconsin. The region is made up of eight U.S. states and two Canadian provinces, which account for one-third of North America's population.

The U.S. Saint Lawrence Seaway Development Corporation (SLSDC), an operating administration of the U.S. Department of Transportation and a wholly owned government corporation, is responsible for the operation and maintenance of the U.S. portion of the St. Lawrence Seaway between Montreal and Lake Erie. This responsibility includes maintaining and operating the two U.S. Seaway System locks in Massena, New York, and vessel traffic control areas of the St. Lawrence River and Lake Ontario. In addition, the SLSDC performs trade development functions designed to enhance Seaway System utilization.

Aerial view of the U.S. Eisenhower Lock, Massena, N.Y.

The SLSDC coordinates activities with its Canadian counterpart, The St. Lawrence Seaway Management Corp. (SLSMC), particularly with respect to rules and regulations, overall day-to-day operations, traffic management, navigation aids, safety, environmental programs, operating dates, and trade development programs. The unique binational nature of the Seaway System requires 24-hour, year-round coordination between the two corporations.

This special section discusses many of the activities and programs of the SLSDC and reviews recent studies and analyses. Additional information on the Great Lakes St. Lawrence Seaway System can be found at http://www.greatlakes-seaway.com.

Economic Impact Study

In 2001, an economic impact study for the SLSDC was completed that analyzed the economic benefits to the eight Great Lakes Seaway System states resulting from domestic and international maritime commerce on the system.

The results of the study, which measured 2000 economic data, are compared to the previous U.S. Great Lakes Seaway System economic impact study conducted for the SLSDC in 1991, which measured 1990 economic data. Interviews were conducted with more than 200 terminal operators, shippers, and consignees. A less comprehensive economic benefits update was completed in the mid-1990s that measured 1994 Great Lakes Seaway System navigation season benefits. However, results of that study could not be used for comparative purposes in this report because it did not include the same scope and methodology as the Martin Associates study in determining benefits.

Key study findings:

• A total of 152,508 jobs are in some way related to the 192.0 million tons of cargo moving on the U.S. Great Lakes Seaway System in 2000. Of the 152,508 jobs, 43,968 jobs are direct jobs created by Great Lakes Seaway System activity. These direct-employment jobs represent an increase of 30 percent from the 1991 results. The majority of these direct-employment workers are with shippers/consignees and terminal operators directly dependent on the Great Lakes Seaway System for the receipt and shipment of raw materials (iron ore, limestone, sand and gravel, salt, etc.) and finished products (primarily steel). (USDOT SLSDC Economic Impact Study)
  
  Firms providing transportation services and cargo handling services made $1.3 billion of purchases in the Great Lakes region, which supported 26,757 indirect jobs.¹ Finally, 54,391 jobs are with shippers and consignees using the Great Lakes Seaway System. These jobs do not have the same degree of dependency as do the direct, induced, and indirect jobs, because the shippers and consignees using the Great Lakes Seaway System can and do use other ports for shipment and receipt of cargo. (USDOT SLSDC Economic Impact Study)

• The movement of iron ore on the Great Lakes Seaway System creates the largest impact in terms of absolute number of jobs, followed by the shipment and receipt of coal, iron and steel products, and sand and gravel/aggregates. (USDOT SLSDC Economic Impact Study)

Port workers unload steel shipments in Great Lakes terminal.

• Iron and steel products generate the greatest job impact on a per-1,000-ton basis. For every 1,000 tons of steel moving on the Great Lakes Seaway System, one job is directly generated.¹² Overall, general cargo commodities, such as iron and steel products and project cargo, create greater job impacts per 1,000 tons than do dry-bulk and liquid-bulk cargoes. These impacts are due to the relatively greater labor involved in storing and handling general cargoes, particularly in the vessel loading and discharge process. (USDOT SLSDC Economic Impact Study)

• Maritime activity on the U.S. Great
  Lakes Seaway System generated $3.4 billion of business revenue for firms providing transportation and cargo handling services. This excludes the value of the commodities moving on the Great Lakes Seaway System. (USDOT SLSDC Economic Impact Study)

- The movement of iron ore created $982 million of transportation and cargo handling business revenue, followed by iron and steel products ($786 million) and coal ($635 million).

- On a per-ton basis, for every 1 ton of steel, $250 of business revenue is created. For every 1 ton of other general cargo commodities, $156 of business revenue is generated. Bulk commodities generate significantly less revenue per ton than do general cargo commodities.

• The 43,968 directly employed residents of the U.S. Great Lakes region received $1.6 billion in direct wages and salaries. As the result of purchases by these directly employed workers, an additional $1.9 million of local purchases and consumption expenditures were created, supporting the 27,392 induced jobs. (USDOT SLSDC Economic Impact Study)

• Firms providing the cargo handling and transportation services spent $1.3 billion on purchases for supplies, business and maintenance and repair services, utilities, etc. These local purchases supported the 26,757 indirect jobs. (USDOT SLSDC Economic Impact Study)

• Maritime activity on the U.S. Great Lakes Seaway System created $1.3 billion of federal, state, and local tax revenue in 2000. (USDOT SLSDC Economic Impact Study)

• Between 1991 and 2000, tonnage on the U.S. Great Lakes Seaway System increased from 123.8 million tons to 192.0 million tons per year. As a result of this growth in tonnage, direct jobs increased by more than 10,000 jobs, while induced jobs grew by nearly 16,500 jobs, reflecting higher earnings per direct job as well as a greater consumption multiplier effect. Direct personal income grew by 54.5 percent while induced income and consumption expenditures grew by 121.3 percent over the 1991-2000 period, far outstripping the 27.1 percent inflation rate for this time span. Similarly, business revenue of companies providing transportation as well as the cargo handling services nearly doubled, growing by 96.3 percent over the 1991-2000 period, again, far outstripping the 2.1 percent inflation increase over the same period (USDOT SLSDC Economic Impact Study):

- The greatest growth in jobs was with truckers serving the Great Lakes Seaway System (4,490 jobs), followed by a 4,188 increase with terminal operators and dependent shippers/consignees.

- With respect to job growth by commodity, the largest job growth was created by the movement of coal (a 4,121 job increase), followed by growth in jobs created by stone and aggregates (a 2,204 direct-job increase), and growth in jobs created by iron and steel products (1,367 direct jobs).

Vessel Fleet Study

Two vessels transiting the St. Lawrence Seaway.

In 2001, the SLSDC released a vessel fleet analysis, conducted by Lloyd's Maritime Information Services of London, that looked at the size, characteristics, ownership, age, and deployment of the St. Lawrence Seaway capable and potential world fleet. The study concluded that although the Seaway is capable of handling a large percentage of the world's fleet, infrastructure improvements would allow larger and newer vessels to transit the system.

The study identified those vessels that meet current seaway size criteria and those that potentially could use the waterway following infrastructure improvements within the Seaway System. The basis of the fleet study is an analysis of merchant vessels over 300 gross tons (gt) and over meeting the following criteria:

• Seaway capable: Vessels with maximum dimensions of 740-foot length; 78-foot beam (width); and 26-foot, 3-inch draft.

• Seaway potential: Vessels with maximum dimesions of 1,000-foot length; 110-foot beam (width); and 35-foot draft.

The seaway capable fleet of 300 gt and over embodies 41,909 vessels representing 69.7 percent of the world fleet. The study also found that the majority of vessels in the seaway capable fleet are smaller vessels, mainly 2,500 deadweight tons (dwt). In addition, the average age of the seaway capable fleet is around 21 years.

Improvement of the navigational infrastructure within the Great Lakes Seaway System to accommodate potential fleet dimensions would allow an additional 19 percent of the world fleet to use the waterway. Infrastructure improvements would significantly increase the potential number of the seaway capable bulk fleet by 200 percent while encompassing 46 percent of the world dry bulk fleet. Bulk vessels are the Seaway's mainstay with dry bulk cargoes accounting for the majority of its trade. The Seaway's potential fleet has a relatively younger profile than the current Seaway capable fleet, with an average age of 17 years. (USDOT SLSDC Vessel Fleet Analysis)

Seaway AIS/GPS Project

Computerized Seaway AIS/GPS system will allow vessel traffic controllers to efficiently manage Seaway transits.

Since 1992, the SLSDC has worked with the U.S. Department of Transpotation's Volpe National Transportation System Center and Canadian partners to design and implement state-of-the-art Automatic Identification System (AIS)/ Global Positioning System (GPS) navigation technology. The AIS/GPS project could be an important advance in marine navigation technology, and also contribute to development of shoreside applications for AIS/GPS.

When testing and implementation of the AIS system is completed, during the 2002 navigation season, SLSDC vessel traffic controllers will have accurate, real-time access to the position of commercial vessels in their vicinity. This could enhance safety and improve the efficient transit of vessels through the system. During the 2003 season, the SLSDC, the Canadian SLSMC and the U.S. and Canadian Coast Guards, will work to make the program operational throughout the Great Lakes. In addition, commercial vessels transiting the Seaway traffic sector from Montreal to mid Lake Erie are to have AIS equipment on-board by the summer of 2002. In 2000, industry partners agreed to contribute 50 percent of the final cost of this program, or approximately $600,000, over the 2000, 2001 and 2002 navigation seasons.

2001 Cargo and Tonnage Statistics

Commercial vessel calls on Great Lakes Seaway System port facilities.

Total tonnage through the Montreal-Lake Ontario section of the St. Lawrence Seaway in calendar year CY 2001 was 30.3 million metric tons-5.1 million metric tons or 14 percent below the 2000 navigation season total. The decrease can be attributed, in large part, to significant reductions in imported processed iron and steel (2.0 million metric ton reduction, or 44 percent) and iron ore (1.8 million metric ton reduction, or 18 percent). The reduction in steel shipments was caused by decreased demand for finished steel products both in North America and overseas based on weak global economic conditions. As a result of a recessed North American steel industry, iron ore imports were also significantly below 2000 levels. The reduction in steel imports had a secondary effect on lower grain exports. Approximately 20 to 30 percent of ocean-going vessels exporting grain from the Great Lakes Seaway System enter the waterway carrying steel. Total grain movements through the Seaway in CY 2001 were 11.1 million metric tons-a 1.4 million metric ton reduction or 11 percent.

Low water levels, especially in the Upper Lakes, also impacted overall tonnage reductions for the season. A one-inch drop in sailing draft results in a reduction of approximately 100 metric tons of cargo for Seaway-sized ships. Many major Great Lakes Seaway System carrier companies reported that vessels could only carry approximately 90 percent of a normal shipment due to the reduced water levels.

Several commodities were ahead of CY 2000 levels including petroleum products (up 40 percent at 1.6 million metric tons), salt (up 38 percent at 907,000 metric tons), coal (up 35 percent at 452,000 metric tons), gypsum (up 9 percent at 444,000 metric tons), and steel slabs (up 6 percent at 384,000 metric tons). In addition to cargo movements, total commercial vessel transits posted a 13 percent decline. The Seaway opened its 43rd navigation season on March 23, 2000 and remained open for 277 days, closing on December 24, 2000.

During the 2001 navigation season, the SLSDC reported a 98.3 percent system availability rate in the U.S. sectors of the St. Lawrence Seaway, including the two U.S. locks. Of the delay time, only 6.9 hours (1/10 of 1 percent of the entire season) were due to lock equipment malfunction.

Trade Development Initiatives

Since 1985, the SLSDC has performed trade development and promotional activities geared at generating trade to and from North America via the Great Lakes Seaway System. Program-wide activities include hosting overseas trade missions that promote the entire Seaway System at maritime and trade-related exhibitions, developing commodity-specific marketing plans, and working directly with ports, carriers, terminal operators, labor, and importers/exporters in the development of promotional materials and initiatives. Overseas trade missions, which include U.S. and Canadian maritime, government, industry, and labor delegates, have led to the development of new international cargo movements into the system. Since 1985, the SLSDC has sponsored 24 trade missions to 56 cities in 37 countries.

In addition to overseas trade missions, the SLSDC is working with various Great Lakes Seaway System port authorities, the Great Lakes Cruising Coalition, the Great Lakes Waterways Management Forum, state and local governments, and tourism associations to attract cruise vessels into the Great Lakes. An expected 7,500 cruise passengers will likely travel the Great Lakes during the 2002 season, compared to 1,500 passengers during the 1997 season.

Foreign-Flag Vessel Inspection Program

The SLSDC and the U.S. Coast Guard, in conjunction with Transport Canada and the SLSMC, signed a memorandum of understanding in March 1997 to develop a program of coordinated vessel inspection and enforcement activities to expedite the safe transit of shipping through the Great Lakes Seaway System. The principal goal of the program is to inspect all ocean vessels related to safety and environmental protection issues in Montreal, Quebec, before they enter U.S. waters.

The goal was achieved in 2001, with 252 Enhanced Seaway Inspections-233 performed by SLSDC inspectors and 19 performed by USCG marine inspectors. This improved inspection regime has saved vessels, on average, four hours per transit and ensured that any safety or environmental issues are addressed prior to entering U.S. waters. As a result, ocean carriers using the Seaway System saved nearly $500,000 in operating costs during the 2001 season.

Lock Operations

SLSDC's vessel traffic control center in Massena, New York.

Since the waterway's opening in 1959, the SLSDC has maintained a strong safety and availability record for the U.S. sectors of the St. Lawrence Seaway, including the two U.S. locks in Massena, New York. During the 2001 navigation season, the availability of the U.S. seaway sectors and locks maintained and operated by the SLSDC was 98.3 percent. The availability rate includes delays caused by human error, mechanical failure, and weather conditions (poor visibility, high wind, or ice formation). During the season, only 6.9 hours (1/10 of 1 percent of the entire season) were due to malfunctioning lock equipment. (USDOT FY 2001 Performance Report)

In Memoriam

This special Seaway section is dedicated to the memory of Robert J. Lewis who died January 6, 2001, of cardiac arrest. Lewis joined the SLSDC in 1971 as director of the Office of Systems and Economic Analysis and later became director of the Office of Trade and Traffic Development. When he retired in 1999, Lewis was director of the Office of Development and Logistics.

Lewis's specialty was Seaway System trade and economic statistics, and he was the project manager for all trade and traffic-related studies conducted by the SLSDC for more than 25 years. He was highly regarding by the Department and Seaway stakeholders for his expertise in the area of maritime statistics and economics.

References

U.S. Department of Transportation (USDOT), Fiscal Year 2001 Performance Report and Fiscal Year 2003 Performance Plan, March 2002.

U.S. Department of Transportation (USDOT), Saint Lawrence Seaway Development Corp. (SLSDC), Economic Impact Study of the Great Lakes St. Lawrence Seaway System, August 2001.

U.S. Department of Transportation (USDOT), Saint Lawrence Seaway Development Corp. (SLSDC), Saint Lawrence Seaway Vessel Fleet Analysis 2001, August 2001.

U.S. Department of Transportation (USDOT), Saint Lawrence Seaway Development Corp. (SLSDC), Transportation Cost Savings, August 2001.

¹ Direct jobs are jobs directly generated by port activity; Induced jobs are jobs created due to the purchases of goods and services by those individuals directly dependent on port activity; Indirect jobs are created due to the purchases of goods and services by firms, not individuals.

² It is to be emphasized that the jobs-per-ton measure is a static measure. The jobs-per-ton ratio should not be used to estimate impacts for an increase in steel tonnage, since a large percentage of steel-generated jobs (i.e., forwarders, agents, chandlers (those who supply vessels with ship supplies), etc.) are fixed over the short term. To estimate incremental impacts of changes in tonnage, the individual port impact models should be used, which are designed for that purpose.